Why IT Matters

 
 
By Peter Fingar  |  Posted 2003-09-01
 
 
 

A torrent of debate followed the harvard business reviews publication May 1 of the article "IT Doesnt Matter." Although the article embodies several truths, its assumptions, premises and conclusions merit closer examination if, as in the story of the Blind Men and the Elephant, the whole picture of IT and competitive advantage is to come into focus. The article looks at only parts of the elephant, and therein lies grave danger for business leaders who read it and draw conclusions for the whole of IT. After all, an elephants tail is not an elephant.

By limiting its scope and depth of analysis, the article is indeed dangerous. Key

issues are raised that must be probed more deeply to gain a full understanding of how IT really matters. Here are some counterpoints to these issues; they are elaborated in a just-released book, "IT Doesnt Matter—Business Processes Do."

Industrial Age technology doesnt equate with information age technology.

The articles discussions about scarcity and proprietary advantage apply to technology as a business—the IT industry—not the business use of technology for competitive advantage. Infrastructure technologies provide their business users opportunities for competitive advantage when they approach critical mass, not early in their development.

The article is about the beginning of the end of the first 50 years of business and IT, not the end of the beginning of the second 50 years, where business process automation replaces functional automation and data processing. The article is about functional applications, not end-to-end business process management, which is the real frontier for business and IT. Grids, Web services and computing utilities dont equate to generic applications that become commodities for those using them. Web services arent about commoditizing business applications; they are an extension of service-oriented application architectures that began with object orientation in the 1960s. Best practices arent the only practices. Best-practice and best-in-class business processes are not the same, and companies need both to compete effectively.

A deeper economic and technological analysis reveals there are many signs that the IT build-out is not closer to its end than to its beginning. In short, the article focuses on the past—the first 50 years of data-centric automation—and it misses the business process automation breakthrough that sets the stage for the next 50 years. We are now on the cusp of a new opportunity for achieving strategic advantage with IT that General Electrics 2002 Key Growth Initiatives describes as "the greatest growth opportunity our company has ever seen."

Peter Fingar, executive partner of the Greystone Group, is co-author of "IT Doesnt Matter—Business Processes Do" (www.bpm3.com/hbr). He can be reached at authors@bpm3.com. Send your comments to free_spectrum@ziffdavis.com.

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